Loan Scams: Ways to Avoid Them

Loan Scams: Ways to Avoid Them

We all need a little financial help now and then, and while there are many reputable loan providers, there are those who are unethical, and if you aren’t careful, you could end up paying much too much in terms of interest on a loan. Unethical loan providers prey on those who are in financial difficulty, and with that in mind, here are a few tips to ensure that you never become a victim of a loan shark. 

  • Do Some Research on the Loan Provider – Loan sharks do their best to put forward a respectable image, yet if you look closely behind the scenes, it becomes obvious that they are not actually a registered loan provider. Accreditations are the first thing to look for, and if they are not a member of any association or federation, then you should look elsewhere. The loan industry is strictly regulated, with organisations like The Mortgage and Finance Association of Australia (MFAA) and any loan provider who is not affiliated with this association probably isn’t legal either. There are reputable loan providers that offer unsecured personal loans with bad credit, so if you have a far from perfect credit score, you can still obtain an unsecured personal loan.
  • Beware of Unusually Low Interest Rates – Very often, the loan shark will advertise, very low rates of interest, which is designed to draw you into the next step, and their terms and conditions will likely contain a few nasty surprises. When an unethical loan provider is attempting to convince you, they will use many tactics to entice you into borrowing, making their package look much better than it actually is. The real meat of the agreement is usually tucked away somewhere in the terms and conditions that you agreed to, and in a lot of cases, there’s nothing you can do.

  • Positive Testimonials – These might come in the form of success stories; how people have used their services to become debt-free and starting their own online business, and with many positive stories, you do get some peace of mind. If you need any help with home budgeting, there is a great article on how to budget for home living, which is recommended reading for all. If the loan provider’s website has a few case studies and some success stories, this is a good indication that they are, in fact, a legitimate lender.
  • Level of Service – The loan provider should listen to your explanation of where you are now, and then discuss various loan repayment strategies, always keeping your best interests at heart. If you get the feeling the loan provider just wants to sign you up, then it is best to look elsewhere. A sign of a reputable loan provider is pointing out both the pros and cons, and with your best interests at heart, the solution will be one that works best for you.

Fortunately, there are reputable loan providers in Australia, who have helped thousands of people to become debt-free, and they can easily be found with a Google search. Whatever your financial circumstances, the reputable loan provider would help you select the right loan, and before very long, your debts will be a thing of the past.

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